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Short Coal with the KOL ETF

A number of coal stocks have fallen out of favor as the
price of coal has dramatically fallen over the past three weeks. There was an
initial spike down in coal at the beginning of July with a small rally. Now the
chart for coal has broken below resistance and is due for a further decline.

The ETF

Instead of
picking an individual coal stock to short, there’s an ETF that is long the
commodity that you can short or buy a Put against. That ETF is the Market
Vectors Coal ETF (KOL).

The Trade

Short the
KOL ETF when there’s a lift in the morning or a rally during lighter trading
between 12-1pm. You should place a stop on the position 10% above your entry
price and adjust the market stop everyday as the ETF moves down. Let the
position run or let the market stop get you out.